The Maharashtra Real Estate Appellate Tribunal (MREAT) has delivered an important ruling for homebuyers facing delayed possession. In a recent case, the tribunal held that while a delayed project can trigger a refund of the flat cost with interest, buyers cannot ask the developer to refund statutory charges like GST, stamp duty, registration fees, TDS, or MVAT. These amounts are treated as government dues, not as the developer’s income. This distinction may sound technical. But it directly affects what a buyer can realistically recover when walking away from a delayed project.

What Exactly did the Maharashtra Tribunal Decide

The case arose from the purchase of a high-value flat in Mumbai. A homebuyer booked an apartment of about 1,000 sq ft in January 2017 for a price exceeding 2 crore rupees. The agreement promised possession by December 2019, with a grace period till December 2020. Construction did not keep pace. A partial occupation certificate came only in July 2022. The buyer also alleged unilateral changes in the project. Eventually, the buyer chose to withdraw and sought a refund of:

  • The flat price

  • Interest for the delayed period

  • Plus all statutory charges paid along the way, such as service tax or GST, stamp duty, registration fees, TDS, and MVAT.

MahaRERA directed the developer to refund the consideration amount with interest for the delay. But did not order a refund of statutory levies. The buyer appealed to MREAT seeking these additional amounts.

MREAT agreed that the buyer was entitled to a refund of the flat price, plus interest. However, it refused to burden the developer with a refund of GST, stamp duty, registration fees, TDS, or MVAT. The tribunal held that:

  • These are statutory charges owed to the government.

  • The developer collects them as an intermediary and passes them on to the authorities.

  • Once paid to the government, they are not part of the money “received” by the promoter under the agreement for sale.

The tribunal also noted that the broader question of whether such statutory amounts can be claimed under section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA) is already pending before the Bombay High Court in another appeal.

So, for now, the line is clear at the tribunal level in Maharashtra. The developer refunds the flat price and interest, but not taxes and duties already paid to the government.

Why is this Problem Common in Real Estate

Delays in possession are, unfortunately, routine across major Indian cities. Projects often miss original timelines due to approvals, funding issues, design changes, or pure mismanagement. Courts and tribunals have repeatedly directed developers to refund money with interest in such cases. For instance, the Bombay High Court upheld an order directing a prominent developer to refund amounts, with interest, to buyers in its luxury Wadala towers, where flats booked in 2012 to 2013 were not delivered by 2017. Maharashtra tribunals have also passed strong orders in other matters. In some cases, they have ordered a refund of the full amount, with interest. Sometimes, there is even additional compensation for buyers who faced very long delays.

In parallel, buyers routinely pay:

  • GST on construction services

  • Stamp duty and registration fees on the agreement

  • One percent TDS on high-value property purchases

When a buyer decides to exit a delayed project, the natural expectation is that “everything paid” will be returned. The Maharashtra ruling clarifies that the legal system does not always view it that way. There is a clear separation between contractual consideration and statutory levies.

How other Rulings Handle Refunds and Costs

Under section 18 of RERA, a buyer can demand a refund of the amount paid to the promoter along with interest if the promoter fails to hand over possession by the agreed date. Courts have read this as a strong, buyer-friendly right, sometimes called an absolute right to exit if the timelines are not met. However, different forums have taken slightly different approaches to what exactly must be refunded. In some cases, tribunals and courts have ordered refunds not only of the flat price but also of pre-EMI interest and certain incidental charges, on the grounds that these costs flowed directly from the delay.

In contrast, the present Maharashtra ruling draws the line at taxes and duties that go to the exchequer. It leaves those to be separately claimed from the government under the relevant law. Because multiple decisions are emerging across different states and forums, and because one appeal is pending before the Bombay High Court on the statutory levy issue, the law is still evolving. We are likely to see further clarification in the coming years.

The Tax Angle: GST, Stamp Duty, and TDS are Government Dues

From a tax perspective, the tribunal’s approach is consistent with how these levies work. GST on an under-construction property is a tax on the service of construction. The builder collects GST from the buyer and deposits it with the government. The Central Board of Indirect Taxes and Customs has already issued Circular 188/20/2022 to lay down a process for the refund of GST to unregistered homebuyers when their booking is cancelled, and the builder refunds the base amount.

Under that framework, the buyer must file a refund application directly with the GST department within a prescribed time, usually two years from the cancellation letter. Similarly, stamp duty and registration fees are collected under the state stamp law. High courts, including the Bombay High Court, have, in appropriate cases, allowed refund of stamp duty paid on agreements that were later cancelled, often through applications to the stamp authorities rather than through claims on builders.

TDS on property purchases is deposited with the income tax department and is credited to the seller’s PAN. Giving that money back would usually require rectification or adjustment at the department level, not a simple order against the developer. The Maharashtra tribunal has effectively aligned RERA remedies with this tax design. Developers handle these amounts as collecting agents and cannot be compelled to repay them after remittance.

What Should Homebuyers do in such Situations?

If the possession of your booked flat is significantly delayed and you are considering cancellation, a structured approach can help.

  • First, use RERA or the appellate tribunal to seek refund of the flat consideration along with interest for delayed possession. This is still the most direct and established remedy against the promoter.
  • Second, identify separately how much you have paid as GST, stamp duty, registration charges and TDS. Keep agreements, challans, payment receipts and the cancellation letter ready. These documents are essential for any tax refund process.
  • Third, for GST, explore filing a refund application as an unregistered buyer, following Circular 188/20/2022 and the online process described on the GST portal. Professional assistance can help in correctly classifying the claim, tracking timelines and responding to any queries from the department.
  • Fourth, for stamp duty, examine the state specific procedure for claiming refund when an agreement is cancelled. This typically involves an application to the Collector of Stamps or a similar authority, supported by the cancellation document and proof that the transaction did not go through.
  • Fifth, for TDS, discuss with your tax advisor whether rectification or a revised return is needed so that the tax already deposited can be correctly dealt with in your and the developer’s income tax records.
  • Finally, for future bookings, buyers and developers can both benefit from clearer clauses in the agreement on what happens in case of cancellation, how statutory charges will be treated and who will assist with refund processes.

Conclusion: Clearer Boundaries, but not the Last Word

The Maharashtra Tribunal’s ruling gives much-needed clarity on one point. Developers are responsible for refunding what they actually receive as consideration for the flat, along with interest and compensation for delay. They are not responsible for refunding GST, stamp duty, registration fees, TDS, or similar levies once these have been paid to the government.

For homebuyers, the message is twofold. RERA remains a powerful tool to recover the core investment when a project fails to deliver on time. At the same time, buyers must separately pursue their rights under GST and stamp duty laws to recover statutory charges. Given the evolving nature of both RERA and GST jurisprudence, affected buyers should not assume that “everything will come automatically” from the builder. A coordinated plan that covers both real estate remedies and tax refund procedures is now essential.